Raju Vegesna on why Zoho is not for sale

BANGALORE, INDIA: "Nearly 80 per cent of acquisitions have been failures, with only a 10 per cent or so success rate - of course this is debatable. One just can not assume that once you acquire a company you will get a good relevant output," notes Raju Vegesna, chief evangelist, Zoho, in an interaction with Deepa Damodaran of CIOL. Excerpts:

CIOL: Why has Zoho taken a private route? Don't you think Zoho, if acquired by a larger company, can get better exposure?

Raju Vegesna: Theoretically this may make sense in terms of broader adoption possibilities but practically it fails. We have seen more failures than success. Nearly 80 per cent of acquisitions have been failures with only a 10 per cent or so success rate - of course this is debatable. One just can not assume that once you acquire a company you will get a good relevant output.

There are technology and cultural difference and in many cases where these do not gel well. From a founders perspective and an investors perspective, they may get their get their money back and quit if they want to but what happens to the passion and the vision - it gets lost. Several founders cash out and leave the business like in the case of Zynga.

CIOL: Zoho's revenue from the Indian market stands at 5 per cent. How much is that going to grow in the coming years?

Raju Vegesna: That's quite tough to predict and that has to do with various other factors. India is definitely one of the fastest growing markets for Zoho and we evaluate ourselves on a monthly basis and we generally don't make such predictions. Based on the situation and needs we put in our efforts. We are definitely expanding our sales and marketing strengths in the country.

CIOL: Zoho's products compete with Google, Microsoft and Salesforce, so what is your USP?

Raju Vegesna: We compete with Google and Microsoft and many other enterprise players like NetSuite and NetApp. Our key differentiation is the breadth of our applications which means when it comes to enterprise applications, we have the broadest suite. Zoho suite is broader than what Google, Salesforce and Microsoft offers in the market.

The breadth and depth of these applications matter a lot and hence while comparing it is not the number of applications but the depth of these applications that matter. Another point is that just because we compete with these players does not mean we ca not partner with them; we compete with Google for around 10 apps but Google does not have around 15 other business apps that we have. What we do is integrate with Google and sell our apps to users thereby creating an interesting co-operation. This also widens our reach and we get to offer our applications to a wider user base.

CIOL: Can you give us some specific examples of how Zoho's product suite is wider than that of your competitors?

Raju Vegesna: Let's take Google; Google has email, calendaring, documents, word processor, website creation, presentation creation as a part of their Google apps suite. Zoho also has all these applications, but on top of this we have specialized applications for Invoicing, Accounting, CRM for customer relationship management, Customer Support, Web Conferencing, HR-recruitment, Project Management. These applications aren't offered by Google, Microsoft or Salesforce for that matter. That is the breadth of our applications. I may have even left out to mention 10 more applications but at a high level this should give you fair idea of our position. We not only compete with Google on the productivity and collaboration applications but it is the business applications that we are very strong on. Google does not have any business applications and when I mean business I mean CRM, accounting, customer support, invoicing and the like.

If you look at Salesforce, they offer apps like customer support and invoicing but they lack collaboration applications like email and the like. You would ask why does this matter? It matters a lot because at the end of the day all your applications need to talk to each other. So with regard to the SMB market, we have the broadest portfolio of apps.

CIOL: We hear everyone talking about Cloud these days. What does Zoho have to offer in this space?

Raju Vegesna: We are a SaaS vendor or offer Software as a Service. We have cloud apps. Cloud computing is a broad term and can denote the infrastructure end of the technology, for example what Amazon does in the space - that is the cloud computing layer where you don't run your physical server but you run your applications on the Amazon server. Zoho doesn't play in the infrastructure market and we don't want to play there.

It requires a different skill set, more investment and the strength of a larger company. Zoho focuses on the development and creation of cloud applications-user facing applications and this is where we try to add value. Technically all Zoho applications can run on Amazon's cloud or any of Microsoft's cloud computing solutions. Have said that, basic Cloud computing is at a lower level and Cloud applications is at a higher level - We play in this market.

CIOL: What is your take on India as a market for cloud applications?

Raju Vegesna: There are several companies that are going to be playing in this space. There are two facets, one is that cloud apps are definitely coming out and penetrating the Indian market, the second is the most interesting and is a combination of cloud and mobile. Though a mobile phone does not have the capability to process a lot of information, the Cloud does and when you combine these things something very powerful can emerge.

When I say cloud I mean cloud apps which lets you access data processed by back-end but the results can be viewed on your phone. Zoho is just about to launch a new feature in our CRM app where anyone can use it on their phone to view all customers in the current location. The application makes a request to the cloud, gets all the 1000's or more addressed featured in your database and sends it back to your phone. This would be impossible with just a phone because you can't store a large database; this is now possible because of the cloud. This creates values on to your phone. This combination of cloud and mobile is going to hold significant value especially in a market like India.

CIOL: In the next few years, what is going to be the one major area of focus for Zoho?

Raju Vegesna: Zoho will be known for its business apps, it broad set of business applications not only for the consumer but for businesses as well. If you are running a business, it will be good to know Zoho because we can deliver a lot of value in terms of our products. We will continue to focus our efforts and launch more products along those lines.

CIOL: What is the technology behind your products?

Raju Vegesna: A lot of open-source stuff. To offer applications we need to make sure we have a good stack stack here. At Zoho we use Linux; a layer of Linux and a combination of databases like MySQL and Postgre SQL. Also databases like Casandra. We use many infrastructure based databases like Hadoop for scaling the file systems. On the language side we basically use Java, most of our apps are developed using Java. For mobile apps we need to go with the native application development like Java for Android.

CIOL: What are some of the interesting things that you see in the Indian market?

Raju Vegesna: A very interesting thing in the Indian market is the mobile adoption and that is going to fundamentally change the way we see things. If you look at the telephone industry, we directly dumped the landline and went straight to the mobile phone. This is going to have some interesting implications especially because the next jump is going to be smartphones. The future is going to be about smartphones and smart computing devices like tablets. There are going to be more people using these smart devices rather than PCs. If you look at the total number of PCs in India - laptops and notebooks combined, it is less than 17 million or so.

If you look at the mobile phones there are more than a billion phones which will soon have the potential to transform into smart phones. Smartphones and tablets are slowly becoming the primary computing devices of people and all applications will have to be accessible through these devices. This makes it easy for Zoho, in reaching the target audience because reaching people through the mobile phone and their attitude towards exploring new apps is easier and faster. The mobile experience is very interesting for us.